Suppose That the Banking System Does NOT Hold Excess Reserves

question 311

Multiple Choice

Suppose that the banking system does NOT hold excess reserves and the reserve ratio is 25%.If Molly deposits $1000 cash in her chequing account,the banking system can increase the money supply by an additional _____:

• A) $5000.
• B) $1000.
• C) $3000.
• D) $4000.

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